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Where does AMLO stand on NAFTA and energy liberalization?

May 12, 2018 - 7:24pm

Andrés Manuel López Obrador

Given it appears unlikely that the US, Canadian and Mexican governments will conclude a NAFTA 2.0 deal prior to the July 1 election in Mexico, it makes sense to take a moment to look at the views of the leading presidential candidate - Andrés Manuel López Obrador aka AMLO - on the North American Free Trade Agreement.

Earlier this year López Obrador stated, “I hope nothing is signed until after the elections and that we don’t rush into making the mistake of signing something that could be bad for us, that could affect our national producers, that doesn’t include the migration issue and that accepts such an infamy as the construction of the wall."

It is also true that López Obrador has been sending contradictory signals saying both "any unfair trade deal can be revised by the Mexican government" and then that he would honour a deal negotiated by the outgoing administration.

On this point, Duncan Wood, director of the Mexico Institute at the Wilson Center, has commented, "I think he is being deliberately ambiguous on a lot of these issues." One of the main reasons for this may be not to spook foreign capital.

He has, however, been relatively clear on the issue of energy.

In January, Reuters reported, "The government of President Enrique Pena Nieto enacted a wide-ranging reform [liberalization] in 2013-2014 to encourage foreign investment [by ending] Pemex’s 75-year monopoly over the energy sector [and opening] oil and gas exploration and production to foreign investors... Though he has moderated his rhetoric about the oil reform somewhat the leftist Lopez Obrador has said he would review the contracts issued by the current government. Industry executives worry that a Lopez Obrador government could at least slow the pace of the energy reform."

In March, Reuters reported, "Speaking in Mexico City on the 80th anniversary of the nationalization of the country’s oil industry, Lopez Obrador also said that within three years of his possible six-year term, Mexico would stop buying foreign fuel, following extensive upgrades of the country’s refining sector."

And just two weeks ago, the New York Times reported, "[López Obrador] has pledged to end oil exports, nearly all of which go to the United States, by 2022, and to instead spend $6 billion on building two refineries that would process crude for domestic consumption. That would sharply reduce American exports of gasoline to Mexico. Mr. López Obrador and his top energy adviser, Rocío Nahle, a former legislator who is in line to become energy minister, have also called for a freeze on future deepwater drilling auctions and a review of contracts with international oil companies."

This is all significant because Mexico is not currently under the disciplines of the NAFTA provisions on energy proportionality.

The Canadian Press has reported, "When NAFTA was originally signed, Mexico rejected parts of the energy chapter because its oil industry was entirely owned and operated by the government. However, President Enrique Pena Nieto is looking to solidify the reforms he started in 2013, opening up the Mexican oil industry to international investment and participation. As such, Mexico has asked to sign Article 605, which limits government interference in oil exports to any of the participating NAFTA countries."

On another key issue in the ongoing NAFTA negotiations that now face a May 17 deadline, the Canadian Press recently reported, "Jerry Dias of Unifor suggested that if the current Mexican government won't agree to boost salaries [of auto workers], perhaps everyone should wait a few months until after the Mexican election and negotiate with the next president." Last month, Reuters reported, "[López Obrador has] decried the paltry minimum wage in Mexico, which is less than 90 pesos ($4.96) a day, and the huge salary differences between U.S. and Mexican auto industry workers..."

The Mexican election takes place on July 1 and the new president is to be sworn in on December 1.